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Whistleblower News: Fyre Festival Fraud, Equifax, Barclays

by HB Whistleblower Legal Team


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Mastermind of Disastrous Fyre Festival Sued for Fraud by SEC

The architect of the disastrous 2017 Fyre Festival luxury concert series in the Bahamas settled civil claims with the U.S. Securities and Exchange Commission, admitting he defrauded more than 100 investors of $27.4 million.

Billy McFarland, 26, has pleaded guilty to related criminal charges and faces as long as 10 years in prison when he’s sentenced Aug. 16. As part of the SEC settlement, he agreed to disgorge the amount of the fraud and to a lifetime ban on serving as a corporate officer or director.

McFarland was separately charged in June with scamming at least 15 people out of $100,000, including some who’d been duped by the Fyre Festival. He claimed to have tickets to high-profile events like the Super Bowl but failed to deliver them, prosecutors said. He pleaded not guilty to the new charges.

In addition to McFarland, the SEC sued two of his companies, Fyre Media Inc. and Magnises Inc., and two former employees.

McFarland’s 2017 festival began with promises of music and luxury and descended into a chaos of badly constructed tents, cold cheese sandwiches and a lack of sufficient bathrooms. He pleaded guilty in March to two counts of wire fraud, telling a judge that he “grossly underestimated the resources that would be necessary to hold an event of this magnitude.” read more »

UK prosecutor seeks to restore criminal case against Barclays

The UK Serious Fraud Office (SFO) said on Tuesday it was seeking to resurrect a high-profile prosecution of Barclays over undisclosed payments to Qatari investors during the credit crisis two months after a London court dismissed its case.

The agency had been praised as “fearless” for taking on one of the world’s largest banks when it first charged Barclays and four former senior executives - including a one-time chief executive - with criminal offences in June 2017.

But the prosecution fell at the first hurdle after a London court in May threw out its charges of conspiracy to commit fraud and unlawful financial assistance against Barclays Plc - and a charge of unlawful financial assistance against its subsidiary, Barclays Bank Plc.

Barclays had been charged over payments to Qatari investors in connection with a two-part, 12 billion pound ($16 billion) emergency fundraising, that included a $3 billion loan to Qatar at the height of the credit crisis in 2008. The deal allowed the bank to avoid a state bailout.

The SFO said it had applied to the High Court for permission to serve a draft indictment, a rare legal procedure once called a “voluntary bill of indictment”, that allows prosecutors to challenge a decision made in the lower Crown Court. read more »

Former Equifax manager pleads guilty to insider trading

Sudhakar Reddy Bonthu, a former manager at Equifax, pleaded guilty today to a charge of insider trading based on his purchases of options ahead of Equifax’s public announcement of its data breach.

“Bonthu was privy to nonpublic information pertaining to Equifax’s data breach, and he violated the law when he used that knowledge to enrich himself,” said U.S. Attorney Byung J. “BJay” Pak.  “Our office will continue investigate and prosecute those who take advantage of their positions for illegal gain.”

“Our message with this case is simple - company insiders must follow the same rules that govern regular investors, otherwise the public’s confidence in the stock market erodes,” said Murang Pak, Acting Special Agent in Charge of FBI Atlanta. “If they don’t, the FBI and its federal partners are determined to investigate them and hold them accountable.”

“Bonthu used confidential information to determine that his company had suffered a massive data breach and then violated company policy to illegally profit from it,” said Richard R. Best, Director of the Securities and Exchange Commission’s Atlanta Regional Office.  “Corporate employees cannot take advantage of their access to sensitive information and unlawfully benefit from it.”

According to U.S. Attorney Pak, the charges, and other information presented in court: Equifax Inc. is a consumer credit reporting agency headquartered in Atlanta. During the summer of 2017, Equifax was the victim of a data breach, where hackers acquired names, Social Security numbers, birth dates, and addresses of over 145 million consumers. read more »

School execs awarded $3M in LA-area whistleblower lawsuit

The ex-superintendent of California's Montebello Unified School District and another former executive have been awarded more than $3 million in a lawsuit that claimed they were fired for exposing corruption.

City News Services reports that a jury on Monday awarded whistleblower former superintendent Susanna Smith $2.7 million in damages. Former operations officer Cleve Pell was awarded $567,000. read more »